After at least a year and a half of constant rumors, we finally have concrete answers from Microsoft on how its next console will handle used games, Internet connection requirements, and more. The era of console games being primarily tied to cartridges or discs is indeed over, as Xbox One discs will now be little more than a vestigial form of offline game distribution, a mere means to get initial code onto the hard drives and linked Xbox Live accounts from which they will actually run. The changes Microsoft is making to adjust to this new era show just how tricky the challenge is in threading the needle of user and market expectations.

Developers and publishers have had the used game market in their sights for a while now, so it's not surprising that Microsoft has finally given in to their concerns by providing the option to stop game resales. The Xbox One can't survive without a happy stable of third-party publishers any more than it can survive without a large base of happy gamers, and playing the desires of one group against those of the other has always been a delicate balancing act.

Two main factors have stopped these sorts of used game restrictions on consoles up to now. The first is technology. While there are some Internet-free methods for blocking secondhand game sales, all of them require some sort of proprietary physical media that would add at least a little bit to the distribution cost of both software and hardware. Thanks to Internet ubiquity, this is changing.

The second is inter-console competition—the idea that any console maker that blocked used game sales could be undercut in the marketplace by a competitor that doesn't. While we don't yet know for sure if Sony's policy on used games and game sharing will be significantly different from Microsoft's, Sony has strongly hinted that it is willing to be more permissive.

This could be an opportunity for Sony to differentiate its system from Microsoft in an important way in the eyes of many devoted gamers. On the other hand, Microsoft's move could give Sony the cover it needs to also block used game sales, forming a unified front against the used game market that gamers will have a hard time fighting. (Where will they go—the Wii U? The practically used-game-free world of PC gaming?)

Will publishers bite?

We don't yet know how many publishers will take advantage of the used-game blocking options being given to them by Microsoft. Remember that Xbox One publishers are able to "set up business terms or transfer fees with retailers" regarding used games, allowing the publishers to get a cut of used games sales. EA could, for instance, tell GameStop that its used games will only work on secondary systems if the retailer gives the publisher $10 for every used, EA-published Xbox One game it sells. Gamers wouldn't have to pay this fee directly, but that $10 could show up in the form of increased prices charged by GameStop (the alternative—GameStop taking a hit on its obscene profit margins—is also possible, but it seems less likely).

Some forward-thinking game publishers might take a compromise position by allowing used game sales only well after a game is first released. After all, the vast majority of a retail game's sales usually come in its first four weeks on store shelves. A publisher may decide to protect those sales by preventing retailers from reselling used copies until a month after the game's new release, then keep long-term interest in the game up by allowing used game sales thereafter.

Note that Microsoft is also a game publisher, and the company hasn't said whether it will enable the resale of its own used games on the Xbox One. Also note that, even though Microsoft says it "does not charge a platform fee to retailers, publishers, or consumers for enabling transfer of these [used] games," it only makes money from licensing fees on new copies of software from third-party publishers. If those publishers decide to block used game sales, Microsoft also stands to benefit from the increase in new game sales.

Of course, that assumes that used game sales are actually as bad for the bottom line as publishers think they are. Used game supporters have been arguing for years that a thriving resale market for games actually helps prop up new game prices by promising day one buyers that they will be able to get $20 or $30 back after they're done with the game in a week or so. With the Xbox One, we'll finally be able to test this proposition in a live retail environment. Publishers that decide to block used game sales might see sales of their new games decreasing as consumers cotton on to the fact that they won't be able to recoup any of their investment in that $60 title. Of course, this depends on the marketplace of gamers being better informed and more price conscious than it has often shown evidence of being. But hey, anything's possible.

The agonizingly slow death of the game disc

If Microsoft really wanted to do away with used games, all it had to do was get rid of discs altogether, distributing games exclusively online. Microsoft and Sony both decided the world wasn't quite ready for that due to the current state of online bandwidth vs. game size, but such a move could have solved a lot of perceived problems. Xbox 360 owners are already used to the idea of buying Xbox Live Arcade games that they have never been able to resell or lend to friends. On the PC side, Steam has grown to dominate game sales despite having no mechanism to resell purchases.

The key to user acceptance in both of these cases, though, is that the services tend to make up for their lack of resale with lower prices—XBLA through a hard $20 pricing cap, Steam through frequent and steep sales on older games. While Microsoft has occasionally mademoves toward similar discounts on downloadable versions of retail Xbox 360 games, the online Xbox Live Marketplace often sells games at their original price even years after release and usually utterly fails to be price-competitive with used copies of the same game discs. As we've argued previously, getting users to buy in to a world without used games is going to require publishers to offer a lot more flexibility on new game pricing. Doing this right could benefit both publishers and consumers by cutting out the used game retail middleman.

In any case, today we're faced with a hybrid world in which retail game discs and online game sales both result in a game that is played from a hard drive and a linked Xbox Live account. Given that, the compromises Microsoft has made as far as letting users share those purely digital copies of games are somewhat admirable. Fears about not being able to bring a game to a friend's house or of family members being unable to play a game on each other's accounts were overblown, and they have been handled by Microsoft with some relatively simple account management decisions.

The ability to "share" your entire game library with up to ten people, who can access your games from any Xbox One, also solves many of the problems with how players familiar with discs expect to be able to share their purchases. What Microsoft is doing here is actually a step up from services like Steam, PSN, and XBLA, which don't allow for any digital sharing. It even looks like the Xbox One might be better than disc-based game sharing, in a way, because you can seemingly play your copy of the game at the same time as one of your shared library members. (As Microsoft says, "You can always play your games, and any one of your family members can be playing from your shared library at a given time.")

The biggest bit of collateral damage in the all-but-death of the game disc is the rental market. Really, though, rentals haven't played as big of a role in the gaming market since Microsoft and Sony began offering downloadable demos for practically every game on their systems. We'll miss being able to use services like Gamefly and Redbox on the Xbox One, but not as much as we would have missed our local Blockbuster in the 16-bit era.

The decreasingly inconvenient online requirement

And then comes the thread tying all this together: the inability to use your Xbox One if it's been offline for 24 hours. This isn't nearly as bad as a required "persistent" connection that many feared would knock out their single-player games if there was a brief hiccup in their broadband. It's also not the onerous, market-limiting requirement it would have been in even the recent past.

We are increasingly living in a world (or a first-world, at least) where home broadband connections are almost ubiquitous. Broadband penetration in US households just climbed over 72 percent, according to the National Telecommunications and Information Administration, up significantly from just 50.8 percent in late 2007. That still means that nearly 3 in 10 US households won't be able to easily use an Xbox One, but the households that can't afford or don't want a broadband connection these days likely overlap heavily with those that can't afford or don't want an Xbox One in the first place, limiting the market damage. Also, if current adoption rates continue (far from a given, even though those rates have increased rather steadily over the past 13 years), then a broadband connection could be as common as a telephone line in US homes by early 2019, when Microsoft will probably be thinking about announcing the successor to the Xbox One.

In the meantime, though, some potential players are going to be severely inconvenienced or prevented from playing the Xbox One. Even with 72 percent household adoption, there are still some parts of the US where broadband isn't available at any price, especially in the mountain west. Bringing the Xbox One overseas will be tougher for many because of the online requirement; soldiers at overseas military bases are especially going to have trouble getting their systems online for a regular check-in. That's a shame, because America's soldiers are generally some of the biggest gamers out there. Taking the Xbox One to a remote, disconnected rural cabin for a weekend or keeping dozens of systems connected at conventions or competitions will also cause headaches that don't exist on the Xbox 360 (though on the plus side, you won't have to lug any discs along to these events).

All of these things will require adjustments from publishers and players, and there are going to be growing pains associated with those adjustments. But Microsoft's decisions regarding Xbox One game licenses aren't likely to destroy the console gaming industry any more than the transition to digital distribution destroyed the PC gaming industry. By the time the next next generation of consoles is set to hit stores, the march of technology and the supply and demand forces of the marketplace will have created a new equilibrium in the console gaming market, for better or for worse. It's going to be one hell of a ride getting there.

Promoted Comments

The only sense I can make of Microsoft's plan is that they conceptualize the XB1 as being download-only and all these restrictions are actually 'additions' on top of download only. The problem is that once discs enter the picture, there's a different set of expectations.

I'm not getting an XB1 because the online requirement is a complete deal breaker; I can't always afford home internet service and I doubt I'm the only person in that boat.

As someone who deploys once every year or two, I absolutely wouldn't consider an option like the One. Steam has it right on this front. Offline mode works like a dream. I throw my laptop into offline mode, and I'm good for weeks until I have reliable access to internet again for a bit.

I know many deployers that bring their 360 or PS3 with them on deployment (more 360s than PS3s) with a small screen for use in their rooms. And Internet access was virtually nonexistant in the rooms last time I went over there.

Walk me through this math: "Gamers wouldn't have to pay this fee directly, but that $10 could show up in the form of increased prices charged by GameStop."

Bioshock Infinite is currently $39.99 at Gamestop new and $37.99 used. Skyrim is $59.99 new and $54.99 used.

By the logic above, Bioshock would be $39.99 new and $47.99 used. Skyrim would be $59.99 new and $64.99 used.

Obviously that's insane so where is Gamestop burying this $10 other than taking out of their (as you say) obscene profit margins on used games?

Your answer is going to be, of course, that they will pay you $10 less for the trade in, right? Well, currently you can trade in Skyrim for $17 so they'd cut that to $7? It's hardly worth the drive to the store for $7.

So maybe they split the difference - take a trade in for $14, sell the used copy for $55.99 so the user pays $4 and they eat the other $6. It's possible, but since they're currently making $38 on a used copy of Skyrim FOR DOING ABSOLUTELY NOTHING then it's safe to say that Amazon or others would say, hell we're happy to make $28 on a used copy of Skyrim for doing absolutely nothing.

And in return, the publisher gets $10 to offset their $60 million dollar investment in the production budget to produce the game. Meaning they'll take more chances on new IP, well written single player experiences that don't need to be dragged out with MP to offset used games, etc. This is has the potential to be a huge win for gamers in the end. The only loser here is GameStop.

The game sharing is actually going to save me a good bit of money. Our family currently has 3 Xboxes. Some games that we all like to play together with bad or non-existent split screen, like Borderlands 2 and Dead Island for example, we have multiple copies of so we can play together.

Our Xboxes are always connected anyway and I never sell games back (I've always end up regretting it when I've done it in the past so I stopped selling them.)

After reading this article, I'm now planning on getting One.

306 posts | registered Feb 28, 2009

Latest Ars Video >

War Stories | Thief: The Dark Project

1998's Thief: The Dark Project was a pioneer for the stealth genre, utilizing light and shadow as essential gameplay mechanics. The very thing that Thief became so well-known for was also the game's biggest development hurdle. Looking Glass Studios founder Paul Neurath recounts the difficulties creating Thief: The Dark Project, and how its AI systems had to be completely rewritten years into development.

War Stories | Thief: The Dark Project

War Stories | Thief: The Dark Project

1998's Thief: The Dark Project was a pioneer for the stealth genre, utilizing light and shadow as essential gameplay mechanics. The very thing that Thief became so well-known for was also the game's biggest development hurdle. Looking Glass Studios founder Paul Neurath recounts the difficulties creating Thief: The Dark Project, and how its AI systems had to be completely rewritten years into development.

Kyle Orland
Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in the Washington, DC area. Emailkyle.orland@arstechnica.com//Twitter@KyleOrl

Does the PS4 have any of these requirements? It's hardware is significantly more powerful than the Xbox. I just wish Halo were not a Microsoft exclusive... it's really the only console game that interests me these days. I'm not a big gamer.

The mandatory Kinect is the big kill point for me. I didn't want that crap on the 360, I don't need it, and I don't want to play Kinect games. Everything else just solidly locks down the "do not want" factor.

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Nintendo has its own serious issues, like the hardware being behind the times, it's online services being a complete joke, not using a unified account that lets a single user redownload software they bought on older hardware, a fetish for gimmicky controls that drives away mainstream devs while attracting shovelware...

So, per the example in the article, by having to pay EA an extra $10 per used game sold and passing on that cost to the customer, does that mean a used game at Gamestop will now cost more than a new game? I mean they already sell used games for $55 instead of $60 new, so might as well just buy it new to begin with.

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Not me. I am now buying a Wii U. If Sony pulls this kind of crap I guess Wii U is it for next gen consoles for me. Sony can take that too the bank. As for X-Bone One there is no way I am paying for being screwed.

So, per the example in the article, by having to pay EA an extra $10 per used game sold and passing on that cost to the customer, does that mean a used game at Gamestop will now cost more than a new game? I mean they already sell used games for $55 instead of $60 new, so might as well just buy it new to begin with.

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Partially because their hardware was never anything spectacular.

They are, however, still knee deep in crap for their terrible launch. How do you release a console and not have any games lined up for over 6 months? - excluding Super Mario - thats always a first (there's only so much Super Mario one can take).

So, per the example in the article, by having to pay EA an extra $10 per used game sold and passing on that cost to the customer, does that mean a used game at Gamestop will now cost more than a new game? I mean they already sell used games for $55 instead of $60 new, so might as well just buy it new to begin with.

Or they pay $10 less for that used game when purchasing from the consumer.

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Nintendo has its own serious issues, like the hardware being behind the times, it's online services being a complete joke, not using a unified account that lets a single user redownload software they bought on older hardware, a fetish for gimmicky controls that drives away mainstream devs while attracting shovelware...

And lets not forget their endless milking of the same IPs over and over and over and over and over and over and over and over again.

Really, its time for Nintendo to move beyond Mario and friends, they need some tantilizing NEW titles, too bad they pretty much ruined their chances at that with the hardware.

I personally don't care whether a game is used or not. I care about the price of the game. That's why I've been ok with used games not existing on the PC. I can usually get them at a really good price at a sale. I'm willing to forgo the ability to sell or lend a game when its on the PC. To me that has always been one of the benefits of a console. It fits better into the console's gaming experience.

One would hope that with used games becoming difficult or being eliminated altogether that this would drive down the price of console games. I find this unlikely as publishers are already trying to push the $60 price point higher due to the massive budgets games have these days (and thats a seperate topic to itself). DLC is another conversation as well but at least the gamer gets some notable benefit if its done correctly.

As for the always online connection, there is a regional aspect sure, but the what what these companies fail to address is why this matters to the end users. Whats the perk. You want to require always online connection (or near as makes no difference), then show me the benefits of it. Tell me what I get for accepting this. Give me some kind of backup for what happens when online isn't possible.

This stuff makes me glad i'm not really excited enough to become a day-1 kind of customer. I still like gaming, admittedly, but I can wait a couple of years and see how things pan out before i make decisions. And, along the way, i can pick up older releases cheap.

So, per the example in the article, by having to pay EA an extra $10 per used game sold and passing on that cost to the customer, does that mean a used game at Gamestop will now cost more than a new game? I mean they already sell used games for $55 instead of $60 new, so might as well just buy it new to begin with.

Or they pay $10 less for that used game when purchasing from the consumer.

That still means that nearly 3 in 10 US households won't be able to easily use an Xbox One, but the households that can't afford or don't want a broadband connection these days likely overlap heavily with those that can't afford or don't want an Xbox One in the first place, limiting the market damage.

Also limiting market damage is the fact that unconnected households may have a hard time complaining about the Xbox One online

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Partially because their hardware was never anything spectacular.

They are, however, still knee deep in crap for their terrible launch. How do you release a console and not have any games lined up for over 6 months? - excluding Super Mario - thats always a first (there's only so much Super Mario one can take).

I won't defend Nintendo's library or software plans. I have no plans to buy one in the current state, and it looks like several studios are also choosing to ignore them. But it will be interesting to see what their offerings are like next to Sony's and Microsoft's in the Fall, and see if a year head start has benefited them.

The point was that they're not engaging in any physical media shenanigans, despite their other shortcomings. Let's not white knight Sony yet, we don't know their full plans.

I'm quite fine with most of the stuff Microsoft have told us by now. I rather enjoy the ability to buy a retail game and couple it with an online system, so I can always download it like on Steam or Origin (and as noted, Microsoft is bringing a number of welcome improvements over these).However, I don't like that they are holding consumers hostage with that 24 hour online check in. Allow us to use our game discs as proof of ownership, end of story. What happened to "innocent until proven guilty"? We aren't all pirates you know...

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

Partially because their hardware was never anything spectacular.

They are, however, still knee deep in crap for their terrible launch. How do you release a console and not have any games lined up for over 6 months? - excluding Super Mario - thats always a first (there's only so much Super Mario one can take).

I won't defend Nintendo's library or software plans. I have no plans to buy one in the current state, and it looks like several studios are also choosing to ignore them. But it will be interesting to see what their offerings are like next to Sony's and Microsoft's in the Fall, and see if a year head start has benefited them.

The point was that they're not engaging in any physical media shenanigans, despite their other shortcomings. Let's not white knight Sony yet, we don't know their full plans.

I got and appreciated your point.

If anything, these draconian measures are likely giving Sony an opening to have policies that suck for gamers - but policies that won't suck as much as MS's and so are therefore preferable. Sad.

So, per the example in the article, by having to pay EA an extra $10 per used game sold and passing on that cost to the customer, does that mean a used game at Gamestop will now cost more than a new game? I mean they already sell used games for $55 instead of $60 new, so might as well just buy it new to begin with.

More likely it will mean that the used game stays at $55 a little longer. As the "natural" price goes down, Gamestop would start making up for the $10 by getting back to its usual profit margins on the used game sale. This is all conjecture, of course, but I could see it shaking out this way.

I know this is different with consoles, but I don't remember the last time I bought a game on a disc or wanted to sell a game. I only use Steam and buy games on sales. Yeah, I've been bitten a few times by buying crap game and not being able to return it, but it's so rare and I never pay a full price. But then I like the fact that I don't need to worry about discs, serial numbers, updates, etc. So yeah, it's a love/hate relationship with digital software distribution. But I think that this is the way things are to be from now on. No amount of complaining will change this. With digital distribution the console makers and the publishers have full control over the games, and there is no way they'll be willing to give it up now.

Meanwhile, everyone ignores Nintendo, who hasn't made steps toward any of this bullshit.

1: If I owned a Wii U, my problem would be I wouldn't know anyone else with a Wii U to loan a game to2: There wouldn't be much point trading in a game as there are very few titles available to purchase new anyway3: Game installs on Wii U would be hard given the limited storage space on board.

Back on topic: My main problem is this...There is a company in the UK that employs approximately 28,000 people called CEX. They have hundreds of shops around the country selling used games (not new), blurays, dvd's and pre-owned hardware. This will kill this company as 90% of their revenue is the game side. There are similar, larger companies in the US who really only deal in pre-owned soft and hardware and they will also die. Then think of the numerous rental only companies that will face a similar fate (I know of one in the UK that employs another 6,000 people).

Well done Microsoft, you're effectively putting these people into unemployment to further line your pockets.

The only sense I can make of Microsoft's plan is that they conceptualize the XB1 as being download-only and all these restrictions are actually 'additions' on top of download only. The problem is that once discs enter the picture, there's a different set of expectations.

I'm not getting an XB1 because the online requirement is a complete deal breaker; I can't always afford home internet service and I doubt I'm the only person in that boat.

I know, we're going to see many sponsored ( paid ) my MS, disguised articles. I've been wondering, does the writing come directly by them?

I think this is off base. I wasn't a fan of numerous reports that kept popping up here (as well as other places) before we really knew anything that sounded like the world was ending. I said as much in the comments. In the case of this article and the other about the recently released information, I believe that Kyle has been quite fair

I don't think anyone is really calling for the doom of console gaming, just Xbox. Nintendo's issues will be fixed before the year ends and Sony we're just waiting on to see if the other shoe drops or if they're the control console to Xbox's experiment. With that said, it's not living up to its competition in power and most of the library will be found elsewhere if history is any indication.

But beyond that, you're kind of missing the point of the outrage. It's easy to look for examples to take issue with always online and the used game policy but it all boils down to basic principles. I do not, and will not, support a console with those two demands. I bought the game, end of discussion. No compromise. If you want to verify that without being too intrusive (ala steam) I can accept that, however I do expect services in return and lower prices as you're establishing control over my purchase. You do not tell me what I have to do to play your game. You don't tell me to be online after installation. Always online failed miserably for Ubisoft to the point where they apologized. Going a step down is missing the point. The success and love GOG, Humble Bundle, etc all prove that drm free has demand. The success and love of steam proves that services can accept some restrictions. The failures and hatred of Origin and UPlay say people do not and will not accept more.

Consoles and handhelds just need to follow a simple rule: KISS. Keep it simple, stupid. PC is variable, consoles are not. PC has over a dozen of market places, console does not. If console wants to mimic PC then it'll fail, simply because it is 100% incapable of offering the same value. Thanks to this gen lasting so long, even in price.

Sony has a great chance to step up, but somehow I doubt they will. While Sony could make a great Playstation for consumers, they still need to keep the publishers happy too. Right now, Microsoft is trying for that balancing act. If the publishers think the Xbox One is a better deal for them, we'll see more Xbox/PC exclusives. Part of the draw of the Xbox has always been the selection of exclusives. Uncharted was awesome, but not enough.

At the end of the day, if the Xbox One has better games and bigger titles, it's going to win.

I think the effects on the used game market are only the most immediate and tangible effects. For me, the more important issue is the effective death of ownership of console games that comes with a 24 hour check-in.

The WiiU holds no interest for me so if and when Sony announces something similar thing for the PS4, I'm out of console gaming for good after 20 years. Even Steam, with all its limitations, is more permissive with its offline mode than this system. Never mind "growing pains associated with these adjustments", I'm just not going to participate in MS' vision of the future.

It will be interesting once the first DDOS attack or server complications prevent people from playing offline on their console. Blizzard servers down or UPlay not working is manageable since you can go play something else. But you do not have the option here (if wanting to play something else on the same platform).

I personally don't care whether a game is used or not. I care about the price of the game. That's why I've been ok with used games not existing on the PC. I can usually get them at a really good price at a sale. I'm willing to forgo the ability to sell or lend a game when its on the PC. To me that has always been one of the benefits of a console. It fits better into the console's gaming experience.

One would hope that with used games becoming difficult or being eliminated altogether that this would drive down the price of console games. I find this unlikely as publishers are already trying to push the $60 price point higher due to the massive budgets games have these days (and thats a seperate topic to itself). DLC is another conversation as well but at least the gamer gets some notable benefit if its done correctly.

As for the always online connection, there is a regional aspect sure, but the what what these companies fail to address is why this matters to the end users. Whats the game. You want to require always online connection (or near as makes no difference), then show me the benefits of it. Tell me what I get for accepting this. Give me some kind of backup of what happens when online isn't possible.

I said this in another post but its worth repeating here.

Good Product + Good Service = Money, Loyalty, Puppies.

I cannot upvote this enough. The reason Steam works is its sales and general ease of use. Microsoft sounds like they're trying to head this direction, but it won't work without much better pricing, especially on older games. With the rise of DLC, I think they also need to work on getting "GOTY" type bundles out for more games - basically bundle an older game with all its DLC for a new price. When you need 3+ pieces of DLC for a game and they're each 10-15 bucks...doesn't matter if the original game is cheap.

The mandatory Kinect is the big kill point for me. I didn't want that crap on the 360, I don't need it, and I don't want to play Kinect games. Everything else just solidly locks down the "do not want" factor.

I see the Kinect as a potential deal-breaker as well. I already have a hard enough time figuring out how to fit stuff in my home theater. I don't need yet another gadget that I will rarely use taking up space, and yet another cable added to the rat's nest. At least it doesn't need its own wall wart, so that's something. I guess.

That craziness is what they forced on XBOX one and PS4 as a third party publisher. There is no word on what those games EA is actually developing for the WiiU. It's not Madden, FIFA, Need for Speed or Battlefield 4 or any Frostbite 2.0 game (based on past comments... so what exactly are they developing?